U.S. Stocks Rise on Employment Data Amid Budget Talks

In the euro area, Greece is offering to purchase about 29 billion euros ($37.6 billion) of bonds maturing from 2023 to 2042 at an average of about 33.1 percent of face value, using a 10 billion-euro loan from the region’s bailout fund. Photographer: Kostas Tsironis/Bloomberg

JPMorgan Chase & Co. and Bank of America Corp. advanced
more than 1.7 percent as financial shares rallied. American
International Group Inc. rose 2.6 percent after saying it is in
talks to sell 90 percent of its plane-leasing unit. Apple Inc.
lost 2.6 percent, sending the maker of iPhones and iPad tablet
computers to its biggest weekly decline since May 2010.

The S&P 500 rose 0.3 percent to 1,418.07, the highest level
since Nov. 6, at 4 p.m. New York time. The Dow Jones Industrial
Average gained 81.09 points, or 0.6 percent, to 13,155.13,
extending its weekly advance to 1 percent. Both gauges advanced
for a third week, the longest winning streak since August. The
Nasdaq Composite Index dropped 0.4 percent to 2,978.04. More
than 5.48 billion shares changed hands on U.S. exchanges, or 12
percent below the three-month average.

“We’re increasing equities,” Barry James, who helps
oversee $3.5 billion as president of James Investment Research
in Xenia, Ohio, said in a phone interview. “People got too
pessimistic about the whole fiscal cliff thing. The markets are
in a way looking for a reason to go up.”

Stocks rallied as Labor Department figures showed
employment climbed by 146,000 following a revised 138,000 gain
in October that was less than initially estimated. The median
estimate of 91 economists surveyed by Bloomberg called for a
gain of 85,000. Superstorm Sandy “did not substantively
impact” the data, the agency said. The unemployment rate fell
to 7.7 percent, the lowest since December 2008, as the size of
the labor force shrank.

Consumer Confidence

U.S. equities briefly erased gains after a gauge of
consumer confidence decreased more than forecast. The Thomson
Reuters/University of Michigan preliminary index of U.S.
consumer sentiment for December fell to 74.5 from 82.7 a month
earlier. The median economist estimate was for a decrease to 82.

Investors also watched developments in federal budget
negotiations. The White House has “wasted another week” and no
progress has been made in budget talks, House Speaker John
Boehner said in a news conference today in Washington. President
Barack Obama and Republicans are working toward a compromise to
avert what has been labeled a fiscal cliff -- a Jan. 1 surge of
more than $600 billion in automatic tax increases and spending
cuts that could propel the nation into recession.

‘Cross Currents’

“There is a lot of confusion and there are a lot of cross
currents here to consider,” Terry L. Morris, who helps oversee
about $2.5 billion at Wyomissing, Pennsylvania-based National
Penn Investors Trust Co., said in a phone interview.
“Unemployment has improved, yet confidence deteriorated. How do
you explain the market isn’t doing anything when Boehner comes
out and says we’re nowhere? It seems like the market should have
been going down, but the fact it’s not tells me that the market
wants to go higher.”

Today’s gain pushed the S&P 500 above its average in the
past 50 days for the first time since Oct. 19, according to data
compiled by Bloomberg. The index had spent the previous 32 days
below the threshold, the longest streak since a 52-day stretch
that ended Oct. 7, 2011, the data show. The average is watched
by traders to gauge the market’s trends.

Financial companies in the S&P 500 climbed 0.8 percent as a
group to the highest level since Nov. 6. JPMorgan Chase rallied
2.6 percent, the most in the Dow, to $42.56, while Bank of
America advanced 1.7 percent to $10.64.

Leasing Unit

AIG rose 2.6 percent to $34.13. The insurer said it is in
talks to sell 90 percent of its plane-leasing unit to an
investor group including New China Trust Co. A deal may value
International Lease Finance Corp. at about $5.5 billion,
according to one person with knowledge of the matter, who asked
not to be identified because the talks are confidential.

After the close of regular trading, AIG said superstorm
Sandy will cost the company about $1.3 billion after taxes and
reinsurance, the highest sum disclosed by a U.S. insurer. The
shares tumbled 1.8 percent as of 4:42 p.m. in New York.

Freeport-McMoRan Copper & Gold Inc. climbed 2.9 percent to
$31.70. The world’s largest publicly traded copper producer was
raised to strong buy from buy at Oracle Investment. The stock
slumped 20 percent in the previous two days after agreeing to
buy Plains Exploration & Production Co. and McMoRan Exploration
Co. for $9 billion. The move was a “game changer and a wise use
of capital,” Oracle analyst Laurence Balter said in a note.

Share Repurchases

McGraw-Hill Cos. gained 4.2 percent to $56.53. The global
information-services provider announced a special dividend of
$2.50 a share.

Computer and software makers in the S&P 500 fell 0.6
percent for the only loss among 10 industry groups.

Apple slipped 2.6 percent to $533.25. The shares slumped
8.9 percent this week amid concern that the company will lose
ground in smartphones to Nokia Oyj in China while giving up
market share to Google Inc. in tablets.

Amarin Corp. sank 19 percent to $9.69. The maker of the
cholesterol-lowering drug Vascepa fell as investors lost
confidence that the company will soon be acquired.

Financial Stocks

The cost of protecting against swings in financial shares
from JPMorgan to Berkshire Hathaway Inc. has fallen to a 19-month low as banks fire workers to improve profitability and the
housing market recovers.

Implied volatility for three-month contracts with an
exercise price closest to the Financial Select Sector SPDR Fund
was 21 percent higher than for the SPDR S&P 500 ETF Trust
yesterday, according to data compiled by Bloomberg. That’s the
smallest gap between the key measures of options prices since
May 2011. A gauge of banks, brokerages and insurers in the S&P
500 has climbed 22 percent this year, the most among the 10 main
groups.

Analysts forecast that financial companies will post the
third-fastest profit growth among S&P 500 industries next year
as mortgage interest rates near record lows help drive demand
for a shrinking property supply and banks reduce costs. Home
prices in October rose the most since 2006 and the U.S. economy
expanded more than previously estimated in the third quarter.

“The market is recognizing that the financial sector is
healing,” Paul Zemsky, the New York-based head of asset
allocation for ING Investment Management, which oversees $170
billion, said in a phone interview yesterday. “Housing prices
are rising, so the collateral of the banking system is getting
more valuable, which helps banks weather any future problems.”